This would aim to capture the positive aspects of both extremes, and see contracts consisting of three parts; a fixed element; a variable element; and a risk share.

However, it is unclear whether the blended approach would be adopted for single care pathways, or for entire systems.

There is likely to be a strong case for keeping the tariff for elective care, as this would be the most effective way to tackle a ballooning waiting list.

The biggest issue will be the approach taken for urgent and emergency care, which already operates with a risk share arrangement under the “marginal rate” tariff (in which providers are paid less for activity over a defined baseline).

Providers feel strongly that they carry too much of the risk under the marginal rate, so will either want the formula to be significantly tweaked, or a whole new approach to be taken.

Essex Way

Southend Council will formally decide next month if it will refer the Mid and South Essex sustainability and transformation partnership’s reconfiguration plans to the health secretary.

It means that £118m of central funding allocated for the STP, which has set out plans to reconfigure services across three acute trusts (which are due to merge in April) is on hold until the matter is resolved.

Alan Tobias, chairman of Southend University Hospital Foundation Trust, said the council’s objections were “disappointing”, especially at “this late stage [and] despite us having regular dialogue”.

He added in a statement: “Until we know the outcome of that decision we cannot fully progress our plans to gain access to the £118m of investment, which is frustrating.”